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Tata Global Beverages will raise R325 crore ($52.5 million) selling a type of low-coupon bond, sources said, the first prominent issue of its kind since RBI asked lenders not to buy such bonds citing credit risk.

Tata Global, rated AA+ by local credit rating agency Icra, is the worlds second-largest tea group and part of the sprawling Tata conglomerate. It is issuing a three-year bond with a 3% coupon and a redemption premium of 9.75%, two sources with direct knowledge of the matter said.

Low-coupon bonds can be attractive for issuers who want to defer a large part of their interest payout to a later date. The sources said the Tata Global Beverages bond does not have a sinking fund to collect accrued interest as debt matures, which would ensure payout at redemption in case of default.

Yes Bank and Deutsche Bank are the joint arrangers of the bond sale, the sources said. Banks declined to comment.

Because banks are not eligible to invest in the bond, the potential investor pool is smaller than for other corporate bonds. Before RBI toughened its stance on such debt structures, roughly half of low-coupon bonds were bought by lenders, dealers said.

There is credit risk associated with such low-coupon bond issuance in the absence of a sinking fund, the RBI said in a letter to banks early this year. The RBI directive does not prevent banks from underwriting such deals, and does not apply to insurers, mutual funds, provident funds and non-bank finance companies, which also have invested in low-coupon bonds. A Tata official did not immediately respond to a query.